BANGALORE: The increased willingness of users to pay for content and enterprises to advertise on mobiles is opening up new business opportunities, triggered by the rapid penetration of internet-enabled phones in the country.

Startups that offer hyper-local deals, messaging in regional languages and games on mobile internet platforms will grow quickly, according to a report by financial advisory firm Avendus.

"Investors have been concerned about whether companies will make money despite the high smartphone penetration," said Aashish Bhinde, executive director at Avendus Capital. "Two primary monetisation models —advertising and user-paid apps — are already at a sizeable scale."

The Indian mobile advertising market will cross Rs 2,800 crore and revenues from paid mobile applications will touch Rs 2,000 crore in 2016, according to the report "Mobile Internet in India, 2013".

"When I travel to small towns, I see two to three people crowded around a mobile phone and watching an entire movie on it," said Mukund Mohan, India head for Microsoft Ventures, the incubation arm of the global software maker that has backed local-language messaging service Plustxt Mobile Solutions.

A case in point is Y2CF Digital Media's rewards service "hoppr," which has crossed 4.5 million users this year. Through hoppr a user can "check in" to a location like a mall by sending an SMS to a number and, in return, receive coupons and deals from nearby merchants and brands. It is backed by Bharti Softbank, a joint venture between Bharti Enterprises and Japan's Softbank Corporation.

"Not many have realised the opportunity that locally-relevant content presents, especially on the local-language content space," said Pratyush Prasanna, co-founder of Plustxt, which has a messaging app that allows users to communicate in eight regional languages. "People said there is no market, when actually users did not have an option." Launched this January, Plustxt has been downloaded over 250,000 times. In August, it was acquired by mobile internet firm One97 for about Rs 20 crore.

Mobile app developers are also catering to the needs of enterprises. "From notifications to reservations, mobile apps have opened a new sales channel for brands," said Nikhil Sama, founder of mobile app development company Snaplion. "More and more businesses want to be associated with consumers 24 hours a day with a mobile app." Snaplion expects to earn Rs 4.5 crore this year in sales.

Internet ventures like online taxi aggregator Ola Cabs are also seeing rapid mobile user growth. Ola, started in 2011, has already seen its app being used about 3 million times. The app, which was launched 18 months ago, accounts for about 30% of its daily bookings. "We are seeing a 100% growth monthon-month on usage of the app," said Bhavish Aggarwal, Ola's cofounder and chief executive.

The Avendus report found that over 50% of mobile internet traffic and paid content revenues come from smartphones. This is dominated by Google and Apple app stores, where few Indian players have made a mark.

"Mobile payments remain a big hurdle. At present, the payment channel on mobile is the same as on the internet, either credit or debit cards," said Avendus' Bhinde. "We need a killer payment app on mobile."